Why we ask full payment before shipment?
1st May 2005
Today I’ll share with you one incidence which was a mistake on our part.
One of our customers from a Carribean country placed an order for a car with us. He had transferred part of the money to our bank account. Trusting that he will send the remaining money I went ahead and shipped the car to St. Lucia. I however did not send him the bill of loading. I was planning to send it to the customer only after getting the full payment. However the payment did not arrive from the customer. So I decided to stop the shipment at the port of Jamaica and negotiated with a shipment company in Jamaica to ship the car back to Japan. It was not possible for us to selll the car to any other customer in Jamaica because of the regulations regarding year of manufacturing.
The transportation fee for shipping the car back to Japan was huge - around $50,000 because no container was available and ours was the only car to be shippped by LO/LO ship. Reluctantly I agreed to ship the car though the price was high.In the meantime, the buyer got in touch with me again asking for discounts. We told him that we have stoppped the car in Jamaica because he did not pay the full amount. He was surprised and immediately transferred the remaining money. Fortunately the ship to Japan had not left, so the buyer could collect the car at Jamaica but he had to arrange for the transporation from Jamaica to St. Lucia
So you can see that it causes problems both for the buyers as well as us when customers do not send full payment by the agreed date.
We as exporter have to take care of many financial risks - such as paying for the storage fee of the car at the port, fees for ship backs etc. So please understand why we ask for full payment before we could ship the car.
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